5 years after the collapse – a serious indictment in the General Trade affair | Israel Hayom

Five years after General Trade announced it was ceasing operations, an indictment was filed today (Sunday) against the company's owners, Dudu Rosenzweig and Sagi Kedem. The indictment charges them with receiving fraudulently under aggravated circumstances, theft by an authorized person, money laundering and operating in prohibited property.

According to the indictment, between 2012 and 2018, the defendants offered the general public in Israel, through the General Trade Group, a brokerage service in which the group's customers could trade securities on the New York Stock Exchange using computer software. The defendants Dudu Rosenzweig and Sagi Kedem received permission from General Trade Group customers to operate with their money with a commitment to separate it from the group's funds and that the money deposited by the customers will be retained as a deposit for trading shares on the stock exchange, which the company will not use for its needs, except for charging fees for transferring sell or buy orders.

In order to promote the fraudulent scheme and maximize the amount of funds that General Trade Group's customers will deposit, so that the defendants can use the trading funds contrary to the authorization given by the company's customers, the defendants made false representations to customers and the general public that the General Trade Group operates in accordance with the regulatory conditions accepted in the securities trading market, that the trading funds are deposited separately from the group's funds, They will be faithfully kept in accordance with the authorization and that the group's customers will be able to receive the balance of their money within a short time if they require it.

Contrary to the false representations, during the years 2012-2018, the indictment alleges that the defendants reached out with the trade funds received fraudulently, mixed the trading funds together with the company's funds and used the trading funds for a variety of purposes contrary to the authorization, such as salary payments to themselves and the company's employees, payments□ to the group's suppliers and even the establishment of new private ventures abroad that were registered under the defendants' ownership at a financial cost of approximately $5 million – all contrary to the authorization granted and in the amount of approximately $19, 855,632 NIS.

Due to the theft committed by the defendants, General Trade Group entered an extreme state of insolvency until it was forced to disclose to its customers on 09/05/2018 that their trading funds would not be returned and that the group was closing its doors.

At the same time, and beginning in 2015, the defendants falsely reported that General Trade Group was managed and controlled abroad and that it pays tax on its income in accordance with foreign law. Despite this, and contrary to the defendants' report, the General Trade Group was controlled and managed from the State of Israel, thus avoiding paying tax on income estimated at NIS 39,126,565 between 2015 and 2018. The defendants laundered the prohibited property obtained from the fraud, theft and tax offenses in order to disguise its origin by mixing the prohibited property with other property, by transferring it to other corporations under their control and investing it in establishing new corporations while falsely presenting that the property was legitimate and free of any right. General Trade made false representations to its customers, promising them that the funds transferred to it for stock trading would be held in a separate account or trust account in their name, would not be mixed with the funds in the company's account, and only traders would have the practical ability to withdraw them.

In practice, it is suspected that the customers' money, contrary to what was promised, was brought in and mixed with the company's funds and used for operations, salary payments to employees, investments and asset purchases. Customers, some of whom allegedly identified managerial and operational failures, became suspicious and asked to get some or all of their money back. They were rejected in violation of the agreement with them, and the vast majority did not receive the money back.

Wrong? We'll fix it! If you find a mistake in the article, please share with us